Week 9: IT Governance and Funding  

Technology  in  the  Public  Sector  

Northwestern  University  MPPA  490  

Summer  2012  -­‐  Greg  Wass  

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Outline

¤  Why do public sector IT projects fail?

¤  What is IT governance? ¤  Project portfolio

¤  Business case / ROI

¤  Project tracking / QA / IV&V

¤  Funding and accounting for IT projects ¤  Capital vs. operating

¤  Bonding

¤  GASB 34

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Why

do

projects

fail?

IT project fails

¤  A U.S. survey of IT projects conducted by the Standish Group (2001) found that success rates varied from 59% in the retail sector to 32% in the financial sector, 27% in manufacturing and 18% in government.

¤  The British Computer Society (2004) found that 84% of U.K. public sector projects resulted in failure of some sort.

¤  The IRS managed “a string of project failures that cost taxpayers $50 billion a year — roughly as much as the yearly net profit of the entire computer industry.” *

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* Source: Geoffrey James, “IT Fiascoes and How to Avoid Them,” Datamation, November 1997

What do we mean by fail?

¤  Never finishes installation—project abandoned

¤  Installed but rejected by users and removed

¤  In place, being used, but with workarounds

¤  In place, but causing problems

¤  In place, but reducing productivity

¤  In place and being used as intended, but took much longer to implement and cost much more than budgeted

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Source: John Cuddeback, “Why Do (Many) Health IT Projects Fail?,” Georgetown University, 2007

Why do projects fail?

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More critical failure factors

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Source: Shaun Goldfinch, “Pessimism, Computer Failure, and Information Systems Development in the Public Sector,” Public Administration Review, Volume 67, Issue 5, pages 917–929, September|October 2007

Still more…

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Source: Shaun Goldfinch, “Pessimism, Computer Failure, and Information Systems Development in the Public Sector,” Public Administration Review, Volume 67, Issue 5, pages 917–929, September|October 2007

How do projects succeed?

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þ Critical success factors

1.  Executive sponsorship

2.  IT governance

3.  Business needs / requirements

4.  Planning / design phase

5.  Project management

6.  Funding

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CSF #7: Decrease project size

¤  Decrease the complexity of individual projects

¤  Decrease project durations, reducing exposure to change

¤  Improve the quality of the estimates

¤  Reduce the amount of each project “wager”

¤  Facilitate cancelling or restarting efforts that get off track without undermining the credibility of the larger initiative

¤  Simplify vendor management

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Source: Payson Hall, “A Losing Gamble with IT Projects,” Cutter IT Journal, December 2003

Executive leadership styles

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Source: David Feeny, “Public Sector Projects: Set Up to Fail?,” OECD Public Management Service, 2001

Executive leadership styles

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Source: David Feeny, “Public Sector Projects: Set Up to Fail?,” OECD Public Management Service, 2001

IT governance

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Source: David Feeny, “Public Sector Projects: Set Up to Fail?,” OECD Public Management Service, 2001

IT governance: example

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Project portfolio analysis

¤  Project capacity

¤  Projects list

¤  Prioritization / ranking / criticality

¤  Continuous review

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Project portfolio matrix

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Business case / ROI

¤  Project charter / project description ¤  Scope

¤  Estimated cost

¤  Ongoing cost

¤  Benefits, tangible and intangible

¤  Business case

¤  Return on investment analysis

¤  Hurdle rate, break-even point

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Business case

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Source: Amanda Brown, “Breakthrough or Burden?,” accessed 8/10/12 at http://www.charitiesdirect.com/caritas-magazine/breakthrough-or-burden-548.html

Project tracking / QA / IV&V

¤  Periodic (quarterly? weekly?) reporting on project status

¤  Scope / schedule / budget

¤  Public vs. internal reporting

¤  Quality assurance consultant

¤  Independent validation and verification

¤  Program management office

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Program management office

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PMO: example

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IT governance/PMO checkpoints

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Deliverables, reviews, sign-offs

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Source: Amanda Brown, “Breakthrough or Burden?,” accessed 8/10/12 at http://www.charitiesdirect.com/caritas-magazine/breakthrough-or-burden-548.html

IT project budgeting

¤  Large vs. small projects

¤  Applications vs. infrastructure investments - strategy

¤  Capital vs. operating expenditures

¤  Useful life

¤  Project governance

¤  Constraints

¤  Criticality to the organization vs. cost and risk (portfolio)

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